Topic: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading - page 137. (Read 723903 times)

Well, if you can't predict how the rates will be in the future AND you can't predict how long your offers will be used, using the only available variable rate is not a bad move imho.

A different suggestion would be to make FRR ONLY available for 30 day offers. Then rate discovery could happen with shorter timeframe loans while FRR would still not have to be capped.

What did you think about my suggested combination of "smaller interest if position = negative + larger share of profit if position is positive" a few posts back?

Not at all. As it has been said , it should be a percentage (say 25%...?).

FRR used to work well in the past, at a time when total available volume for lending was much less than today. Back then, the FRR "wall" was very rarely above some $200K, it was gone several times a day, and this was on the "background" of about some $500K in total offers.
It was exactly this fact, that the "wall" was frequently gone, which allowed lenders to try placing their offers outside of the FRR rates and it WORKED!!!.
This is what limiting order book's FRR to a defined fraction of total offers will recreate.

There is no arguing that there is always going to be much more offers around current FRR rates and this is the case with trading order books too, this is just human nature. But, a smooth bell-shaped set of offers, which are spread over adjacent values to some degree is much better for proper rate/trend discovery, than a huge, single point value WALL.

I didn't mean to come across as nit-picking, I was just trying to show that all the scenarios degrade to the same state.

My main point is that I think the whole concept of the FRR is fatally flawed.  It is a coalescent point for laissez faire lenders.  If you allow spreads to the FRR such as FRR±x% or FRR±x you might not have a wall, but you are going to have a very steep hill around the FRR that will function the same way.

I thought about applying the same tools that the trader have (stop loss, training, etc) to swaps but swaps and trading are not the same animal.  With trading, when you buy, the deal is done, you own what you traded for.  The is not the same with swaps and I think why that is why the FRR exists at all.

What is causing the FRR to exist/be debated is the fact that the trader is not committed holding the swap for the entire term (and I'm not suggesting that they should).  If a lender could place a swap for 5 days and know that it will be held the full 5 days, I think the FRR would be less widely used and the wall would fall.  A lender would be more likely to hold out for a higher rate if that would be locked in for 30 days.  As it is, a lender can put an FRR offer in and know that if the swap is closed early he still has and offer on the books at a competitive rate.  It might not be a good rate, but getting some return is better than nothing.

I do not have a solution to fixing the FRR wall, but I know the wall is bad for active lenders. In my opinion the FRR should never have existed and should be removed until a better way is found.  Personally, I don't think a better way exists that not favour either the active or passive lender over one another or favour the lenders or traders over each other.

I'd rather have other options for variable rates than FRR. Limiting FRR arbitrarily with "magic" values (100k USD? 500k USD? 50k?) is not really useful imho.

This was just one idea and you are pointing out at only one minor sub-point of everything, going on and on about it and saying that the whole idea cannot work. You simply missed it.

Forget FRR queuing, you are right on that, cancel that option 3, make it as following:
...
3. Place offer at FRR, or if not available - do NOT place any fixed rate offer. (send email notification).

Look, everybody agrees that huge wall at FRR is a bad thing these days, right? It was then suggested to get rid of FRR feature completely. What I suggested is to make a step "in between" and that is, to limit the maximum volume for FRR offers on order book.

Please include your username or email and I will look into this.

None of these ideas will solve the problem, all they will do is hide it.  If a lender is allowed to queue up for the FFR, the wall is still there, but now it is hidden. 

Take scenario 1. If the FRR is full and a lender puts an offer in below the current FFR, his offer will be taken before the FRR and drive the FRR down until it is equal to his offer.  Other lower offers will probably pull the FRR down to or below his offer.  If his offer is not fully taken, we will now effectively have scenario 2 or 3.

If a lender has an offer equal to the FFR, we are right back where we started, if the offer is greater, we have a worse situation.  As the FRR offers are taken and the FRR limit is depleted, the waiting offers will be converted to FRR to fill it back to the limit.  This will continue until all waiting FRR offers are exhausted.  Since other lenders will not know how much is waiting to be converted to FRR, the wall will still be there but they will not be able to see it.

As an example, let the FRR limit be 100k and be currently filled.  A lender or group of lenders put 1m in the FRR queue.  All we can see in the swap book is 100k at FRR.  If a swap of 50k is taken, the system now has space to add 50k from the queue and does so.  The swap book still shows the same, 100k at FRR.  This will continue until all 1.1m in offers is exhausted.  The 1.1m wall is still there but it is now invisible.  To make matters worse, if the FRR engine is fast enough, a lender will not even be able to tell that FRR offers are being taken and it will just appear that the no offers are being taken at FRR.

TH1 is a joke and Bitfinex doesn't respond to emails on TH1. Get out while you can

TH1 - Even if there are multiple market makers, someone can still buy up all (or almost all) the contracts and manipulate the market. 

Something needs to be done with TH1 ASAP, there is going to be a disaster shortly when people that shorted on day 1 are now unable to renew or close position because there is zero liquidity!!

This asset needed to be added through a variety of market makers, not one that can manipulate the whole market!

Hello Phil,

I've personally seen good use of FRR feature in the past, but these days I would agree with noggin-scratcher regarding the issue of "an enormous wall of offers all placed at the single FRR" and the resulting huge spikes (like today, to 0.7%!!!) when this wall is gone. I do not think however that FRR feature needs to be eliminated entirely.

To your list of simpler solution suggestions, I would propose to limit the total volume of FRR offers to a certain percentage of total offers on the order book. I don't know what percentage allocated to FRR will be optimal, but I guess you could start from some high value and go down over time, to ensure smooth transition.

It basically comes to the (optional) requirement for users to specify the rate when they are placing FRR offer. We already have a box for this entry, but currently it gets ignored by the system, if user clicks on FRR option, so perhaps we should try to enable that.
Under simplest implementation of this feature, user's offer will be placed at FRR, or at specified by him/her rate if FRR quote is already taken.

Slight modification of the above will be the availability of additional options, when placing the swap offer, such as the following:
1. Place offer at FRR, or if not available - at user specified rate (this is the same as described above)
2. Place offer at FRR, or if not available - at equal to then current FRR rate (this can be useful, for those using auto-renewal option)
3. Place offer at FRR, or if not available - do NOT place any fixed rate offer, wait until FRR offer CAN be placed.

Note that the option 3 above is very similar to what we have right now (meaning that your offer will "stand in line" for placement at FRR). For this reason, option 3 can be made a default setting. Options 1 and 2 will create much thicker order book and prevent big spikes.

Other than the above, availability of some algos would be ideal and by the way, if you do not want to make the whole platform "overly complicated" (this is of course understandable), perhaps you can make algos available only to those who wants to use them, leaving simpler solution for the rest. I guess BFX will run into problem when people would just "enable" the algos and then annoy the hell out of support team asking basic question instead of reading some sort of a "how to" . To avoid this, a comprehensive "How to" section can be created and users wishing to use the "algo system" would have to pass a simple quiz, before it is enabled on their account for them.  

What do you (and all) think?

I noted that. I'm working the "trust but verify" angle.

I think you are missing the true issue here and that is that the FRR exists at all.  If it did not, lenders would have to maintain their offers daily or set a minimum rate they are willing to accept and use auto-renew.  If they did, the FRR wall would not exist.  There might be just as much money in the pool but it would be spread out instead of lumped at one rate.  I think this would be more fair in that those who are willing to accept a lower rate will have the highest rate of swaps taken while those who want to gouge the borrowers will only do so when demand is very high. Lenders will not get the advantage of the swap going up during it's term like the FFR but will have to accept that since they had undercut other lenders to get the swap taken.

I think the FRR is a crutch and should be removed.  It exists for lazy lenders to get a "good enough" rate without have to maintain their swaps.  For those who would say that they don't have time to check their swaps daily, then don't, remove your swap offers or set them to a fixed value. Bitfinex expects the traders to maintain their positions on a day to day basis and I don't see why the same philosophy should not apply to lenders.

Just to confirm, you are not including the FRR swaps in the swaps that are averaged, correct?

since bitfinex not adding new assets to th1/btc, market prize will going up, and this is bitfinex fault, becouse witohut new assets we have too high prize and too high swap cost, and shorterst need pay this swap cost or they lost.

The big issue with dynamic interest rates is that they need to be predictable for both sides (so e.g. a "I set the interest rate manually every day as lender" won't be fair to the person borrowing).

While something like "FRR + n%" would be cool to have (similar to the idea of Humble Bundle's - "Pay more than the average..."), I am not too sure if that wouldn't just clutter the interface without offering some significant differences.

A more innovative approach might be to either have a (lower than usual - 0.01%?) flat percentage if the trader is at a loss or to get a (higher than usual - 10%? 15%?) share of the earnings, if a position is up. That way you could be bullish on crypto and lend USD to others, while at the moment you only should lend USD if you are bearish on all other markets (or to limit risk). This means you earn more if BTC are getting more expensive, but less if the market is going down.
With such a system it might be important to limit to traders in specific markets (e.g. you can only trade BTCUSD, not LTCUSD with my money), which might complicate things.

Hi, All,

My name is Phil and I am also associated with Bitfinex, and though I never post on btctalk, I wanted to address this issue and get more feedback.  FRR is calculated as the volume weighted rate of all the open fixed rate swaps, so naturally it will lag the inside market and this, of course creates problems for liquidity as it's the only real mechanism we have for auto renewing swaps.  We have spent some time thinking about how to improve this, but frankly haven't arrived at anything that we like better.  I will say, though, that we can certainly make it better by offering various embedded algos with user specified parameters, the problem is that we don't want to make it overly complicated, either.  So, the right solution has to be one that is simple and easy to understand.    So I will ask all of you.  Specifically, how would you improve it?  We recognize the need for improvement - so your suggestions are welcome! 

An update from Raphael today:

"Indeed we took some time to modify our antispam settings. However this is now all set.

All users have the same limits:
min. 0.1 LTC for LTC pairs, 0.01 for BTC pairs"

/Steve

Yes - I had a response from Raphael a few days ago: "The minimum order is still 0.001 BTC, however we have implemented an antispam rule so that you can not place an order of less than 1/1000th of your avalable balance in a currency/wallet unless it is more than 0.1 unit. The reason was an increasing amount of orderbook spam with thousands of tiny orders".

They did set it back to 0.01 for a while, but now for whatever reason they've rolled the change back again.

/Steve